Service: Licensing, Contracts & IP Transactions

Government IP Funding Programs Across Canada

Posted on by Evgenia Apelfield

Securing intellectual property (IP) rights is a critical step for businesses, particularly for start-ups and small or medium-sized enterprises (SMEs), who want to gain a competitive advantage in the marketplace. To assist in funding IP-related costs, various government funding programs have been developed across Canada to help companies secure IP rights.

Below are some common funding programs available across Canada.

Elevate IP:

ElevateIP is a federal program delivered Canada-wide through selected business accelerators and incubators (BAIs) in collaboration with regional partners to help start-ups develop and implement IP strategies, in addition to offering IP education services.

While eligibility requirements and funding amounts vary depending on the BAI administering the program, start-ups may be eligible for up to $100,000 to develop and implement an IP strategy. Most BAIs require, at a minimum, that the start-up have less than 500 employees and be headquartered in the geographic region of the BAI administering the program. The program funding is divided into 3 tiers:

  1. IP Education & Awareness
  2. IP Strategy Development
  3. IP Strategy Implementation

The selected BAIs in different provinces are listed below:

To learn more about the Elevate IP program, please click here.

IP Assist (IRAP):

IP Assist, administered by The National Research Council of Canada Industrial Research Assistance Program (NRC IRAP), is a tiered national funding program designed to support SMEs’ IP efforts. Under the IP Assist Program, SMEs can receive support and funding across three different levels:

  • L1 – IP Awareness
  • L2 – IP Strategy
  • L3 – IP Action

The funding available for IP Strategy and IP Action ranges from $10,000 to $25,000 for each, with an additional $1,000 for IP awareness. To learn more about the IP Assist program, please click here.

Intellectual Property Ontario (IPON):

IPON is a provincial-run program that provides support to Ontario-based SMEs operating in one of IPON’s served sectors – MedTech, life sciences, artificial intelligence, vehicle technology, and mining and advanced manufacturing – to promote innovation and growth in these highly desired sectors in Ontario. Once the SME is enrolled as an IPON client and is part of IPON’s IP Bootcamp or Partner Program, it may be eligible for up to $35,000 in initial funding for IP protection and commercialization services and have potential access to future IP funding of up to $100,000. It’s important to note that the SME has to cover 20% of IP service costs directly, and IPON covers 80%. To learn more about the IPON program, please click here.

Innovation Access Collective (IAC):

IAC is a membership-based not-for-profit organization funded by the Government of Canada to assist Canadian SMEs in the data-driven CleanTech sector with IP-related needs. Full members may be eligible for grant funding ranging from $5,000 to $20,000, while associate members may be eligible for grant funding ranging from $5,000 to $10,000. In addition, IAC also has a Grant for Women in IP created in response to the demonstrated inequitable gender balance in the IP ecosystem. To learn more about the IAC program, please click here.

CanExport Innovation:

CanExport Innovation provides funding for intellectual property protection in international markets and other related services for Canadian SMEs looking to expand into international markets to develop R&D collaborations through partnerships in foreign markets. Businesses may be eligible for funding of up to $75,000 to assist with research and development (R&D) for a single technology. To learn more about the CanExport Innovation program, please click here.

Eligibility requirements and application process:

Please note the information presented in this article represents only a general outline and the above programs are subject to specific eligibility requirements that are listed on their respective websites that are linked above. For more information, please reach out to an MBM professional who can assist you in determining the best funding program for your business and assist you through the application process.

While some of the above programs accept applicants on a “rolling basis”, other programs require applicants to apply to open calls subject to strict deadlines. We strongly encourage businesses looking to apply to consult the program websites linked in this article for further information regarding eligibility criteria, program application process and deadlines.

MBM is an approved service provider for ElevateIP, IP Assist, and IPON.

If you would like to learn more or require any advice, please contact:

Kay Palmer, Ph.D., Senior Patent Agent
T: 613-801-0452
E:  kpalmer@mbm.com

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

Does Copyright Extend to “facts”? The Federal Court Sets the Story Straight on the Extent of Copyright Protection in Non-fiction Work

Posted on by Debbie Malek

INTRODUCTION

In the recent 2021 decision of Winkler v. Hendley, 2021 FC 498 [Winkler], the Federal Court (the “Court”) addressed an unusual issue of copyright protection in a nonfictional work containing descriptions of events with questionable historical accuracy. In its decision, the Court reiterated that copyright protection does not extend to facts. Moreover, when a work is presented as nonfiction, the facts are not subject to copyright protection. This case serves to reinforce the scope of copyright protection and sets an important precedent in Canada for copyright in nonfictional works.

CASE BACKGROUND AND OVERVIEW OF THE DISPUTE

In Winkler, the plaintiffs, John Winkler and the estate of the late author Thomas Kelley (“Mr. Kelley”) sued author, Nate Hendley (“Mr. Hendley”), and his publisher, James Lorimer & Company Ltd., the defendants, for copyright infringement. In 1954, Mr. Kelley published a book called The Black Donnellys, which was published and sold as a nonfictional account of a notorious family from Lucan, Ontario. In 2004, Mr. Hendley wrote and published a book called The Black Donnellys: The Outrageous Tale of Canada’s Deadliest Feud (the “Outrageous Tale”), which cited The Black Donnellys as authority for many of the historical events detailed in the book. Despite The Black Donnellys being published as nonfiction, the plaintiffs argued that some of the events described in the book were actually fictional, or contained embellishments made by the author. It was on the basis of these alleged embellishments and “fictional accounts” that the plaintiffs based their claim of copyright infringement against the defendants under sections 3[1] and 27[2] of the Copyright Act (the “Act”).

ANALYSIS AND DECISION

In its analysis, the Court began by clarifying that in Canada, copyright subsists “in every original literary work”, regardless of “whether that work is one of fiction or nonfiction”[3]. The Court further reiterated the longstanding principle that there is no copyright protection in facts or ideas, but rather, copyright protects the original expression of those ideas. What is critical for copyright infringement is whether there was a substantial taking of the work in issue, defined as the “part of the work that represents a substantial portion of the authors’ skill and judgment”[4]. Importantly, the historical accuracy of the presented facts in a work is not contemplated by the Act. Therefore, the factual aspects of The Black Donnellys were excluded from the Court’s comparison of passages from The Black Donnellys and the Outrageous Tale in its determination of whether there was copying of a “substantial part” of the originality of The Black Donnellys.

After the facts were excluded, the Court concluded that any similarities between the works were so minimal that they did not amount to a substantial taking. Therefore, the Court held that there was no copyright infringement. Moreover, the Court stressed that an author cannot publish a work as nonfiction and later claim that the facts were actually fiction for the purpose of pursuing a copyright case. There are clear public policy reasons behind this principle; the public should be able to rely upon published facts without the concern that the author will later turn around and sue for copyright infringement at a whim. The Court did leave open the possibility that future cases may arise in which asserted “facts” are so implausible that the work must be interpreted as a fiction; however, this scenario was not applicable in this case.

IMPORTANCE OF COURT DECISION AND KEY TAKEAWAYS

  • Winkler is the first Canadian decision addressing a nonfiction work that was later claimed to be fiction.
  • The law is similar in other countries; for example, in the United States, the doctrine of copyright estoppel (also known as the “asserted truths” doctrine) protects against copyright holders of a nonfiction work who subsequently seek to claim that the work is fiction as grounds for copyright infringement.
  • The Court further affirmed the longstanding principle that there is no copyright protection in facts or ideas but rather the expression of those ideas. Importantly, as a general rule, the accuracy of such facts or ideas is not contemplated for the purposes of copyright protection.

CONCLUSIONS

The decision in Winkler is an important consideration for authors who intend to publish and market a book, and highlights the need to look to the future regarding the scope of copyright protection in a published work. Of particular importance is the need to be clear about what is being presented as fact and what is embellished in a nonfictional account. Therefore, prospective authors should also consider consulting with a lawyer experienced in copyright law to discuss how they can best protect their rights in a given literary work.

 

For expert assistance with any issues pertaining to copyright in a work, please reach out to MBM for a free consultation:

Scott Miller, Co-Managing Partner, Head of the Litigation Department
T: 613-801-1099
E: smiller@mbm.com

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.
[1] Copyright Act, R.S.C., 1985, c. C-42, s 3(1).Copyright in works3 (1) For the purposes of this Act, copyright, in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever.
[2] Ibid, s 27(1).Infringement generally27 (1) It is an infringement of copyright for any person to do, without the consent of the owner of copyright, anything that by this Act only the owner of the copyright has the right to do.
[3] Winkler at paras 53-54 citing CCH Canada Ltd v Law Society of Upper Canada, 2004 SCC 13 at paras 8, 14.
[4] Cinar Corporation v Robinson, 2013 SCC 73 at para 26.

Copyrights in Canada – Process, Timeline, Costs, and the Upcoming Proposed Changes to the Copyright Act

Posted on by Debbie Malek

Most people are familiar with patents and trademarks as the most common forms of intellectual property, however, copyrights and their importance as part of your overall portfolio of intellectual property assets are sometimes neglected. This article attempts to broadly cover the subject of copyrights in Canada in terms of process, timeline, costs, as well as the upcoming proposed changes to the Copyright Act.

What rights does a copyright holder have?

Copyright is defined by the Canadian Intellectual Property Office (CIPO) as an exclusive right to produce, reproduce, publish, or perform an original literary, artistic, dramatic, or musical work.

A common misconception is that copyright protects an idea. The truth is that copyright does not protect the idea itself but instead protects the expression of an idea. This expression needs to be “fixed” in a tangible medium (written or recorded) for you to be able to copyright it. For example, copyright gives you the right to control the expression of your original written or recorded speech. As a result, you can charge a fee for allowing another party to express themselves in the same way you expressed yourself in your copyrighted speech as well as your copyrighted literary, artistic, dramatic, and musical works.

How long do copyrights last?

Copyright in Canada currently exists for the author’s lifetime, the remainder of the calendar year in which the author dies, plus 50 years following that calendar year.

However, changes to these current time limits are coming. On February 11, 2021, the Canadian government announced that due to the Canada-United States-Mexico Agreement (CUSMA), Canada has agreed to extend, by the end of 2022, the protection period to a minimum of the author’s lifetime, the remainder of the calendar year in which the author died, plus 70 years following that calendar year.

Why register copyrights?

Copyright is automatic and protects an original work the moment the work is created. Therefore, copyright does not have to be registered for an author to have copyright rights.

However, registering a copyright for your work can be very beneficial because going through the official registration process with the Canadian Intellectual Property Office (CIPO) results in a registration certificate. This registration certificate is an official Canadian government document that is proof that you have rights to your work’s expression and provides a date stamp. This registration certificate can be persuasive evidence when suing someone who is infringing your rights.

How long does it take to register a copyright?

Copyright registration can generally be obtained within a few weeks.

How much does it cost to register a copyright?

Copyright registration is relatively inexpensive. The full process from drafting the copyright application, ensuring that the work is categorized correctly, filing it, reviewing the issued certificate of registration, and sending it to the author, is approximately $400, including MBM professional fees and the required government fees.

What are the steps to register a copyright?

The first step is to draft and file a copyright application.

A crucial piece of information required at this step is the date and place of your work’s publication. It is critical to make sure that CIPO correctly records the date and place of publication if in the future you decide to litigate against an infringer and the infringer argues that their work predates your work.

The next step in the process is an examination of the application by CIPO. If the CIPO examiner determines that the application requires changes, amendments to the application will need to be filed to prevent rejection. Once all the objections are satisfied, the application will register, and the registration certificate will be issued.

What are the proposed amendments to the Canadian Copyright Act?

Two Private Member’s Bills C-272 and S-225, may result in changes to the Copyright Act.

Private Member’s Bill, C-272 was introduced on February 22, 2021, to add section 41.121 to the Copyright Act to modify the treatment of technological protection measures (TPMs). TMPs reduce copyright infringement by controlling the use of a work. The Copyright Act provides stiff penalties including, imprisonment and/or fines up to $1,000,000 for circumventing TMPs. The proposed amendment can allow a person to circumvent “a technological protection measure that controls access to a computer program if the person does so for the sole purpose of diagnosing, maintaining or repairing a product in which the computer program is embedded”. As a result, Bill C-272 will add an additional circumvention exception to the current circumvention exceptions allowed by the Copyright Act. The existing circumvention exceptions include exemptions for law enforcement and national security, reverse engineering for software compatibility, encryption research, verification if a TPM permits the collection or communication of personal information, security testing of computer systems, and accessibility for disabled persons.

Private members bill S-225 was introduced on February 17, 2021, to add a section to the Copyright Act to allow remuneration for journalistic works. This bill was introduced because news stories are easily shared using social media without paying a royalty to the copyright holder. As a result, news publisher’s advertising revenue has decreased significantly while at the same time, social media platforms that facilitate this sharing have significantly increased their advertising revenue. The amendment proposes to add, “[i]f a journalistic work … is reproduced or published on a digital platform that is owned or controlled by a designated digital platform provider, the Canadian journalism organization that owns the copyright in that journalistic work is entitled to remuneration”.

This article broadly covered the process of copyrights as well as some of the upcoming suggested changes to the Copyright Act. If you have created an original literary, artistic, dramatic, or musical work and you have further questions and would like to understand your rights and file one or more copyrights, please feel free to contact MBM for a free consultation.

For more information please contact:

Daniel Lanfranconi, Intellectual Property Lawyer
T: 613-801-1056
E: dlanfranconi@mbm.com

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

The Supreme Court of Canada May Hold Your Silence as Dishonesty in Contract Performance

Posted on by Debbie Malek

C.M. Callow Inc. v. Zollinger, 2020 SCC 45

This case is applicable to all types of contracts including those involving Intellectual Property. The duty of honest performance requires that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of a contract.

In a 5-3-1 split decision, the Supreme Court of Canada (the “SCC”) re-affirmed the duty of honest performance in a contract, formulated originally in Bhasin v. Hrynew, 2014 SCC 71. In this case, Callow did not deny the existence of the right of termination but argued for the wrongful manner in which Baycrest had exercised the contractual right to terminate the winter maintenance agreement with Callow.

BACKGROUND

In 2012, Callow entered into a two-year winter maintenance agreement and a separate one-year summer maintenance agreement with Baycrest. Baycrest was entitled to terminate the winter agreement unilaterally, for any reason, upon giving 10 days’ written notice.

In early 2013, Baycrest decided to terminate the winter agreement but chose not to inform Callow in a timely manner. Throughout the spring and summer of 2013, communications between Callow and Baycrest included discussions about renewing the winter agreement, in which Baycrest created a false impression that a renewal of the winter agreement was likely and that the current winter agreement would not be terminated. As a result of these communications, Callow did not bid on any other winter contract. Callow also offered extra services to Baycrest during the summer, which they hoped would be an incentive for Baycrest to renew the winter contract. Baycrest accepted the free services with silence.

In September 2013, Baycrest terminated the winter agreement by giving the required 10 days’ notice. At this point, it was too late for Callow to secure any alternative winter contract. Callow sued for breach of contract, alleging that Baycrest had acted in bad faith.

ANALYSIS

The trial-level judge found that statements and conduct by Baycrest actively deceived Callow from the time the termination decision was made to September 2013 and awarded damages to Callow in order to place it in the same position as if the breach had not occurred. The Ontario Court of Appeal (“ONCA”) reversed the trial judge’s decision and held that the judge had erred by improperly expanding the duty of honest performance beyond the terms of the winter maintenance agreement.

Callow appealed the ONCA’s decision to the SCC. The SCC looked at two critical issues when considering if Baycrest breached its duty of honest performance:

(1) did Baycrest’s conduct constitutes dishonesty; and

(2) was Baycrest’s dishonesty directly linked to the performance of the contract?

In the majority opinion, it was concluded that by knowingly misleading Callow into believing the winter maintenance agreement would not be terminated, Baycrest had breached its duty of honest performance on a matter directly linked to the performance of the contract, even if the 10-day notice requirement was satisfied, and irrespective of their motive for termination. When awarding damages, the court considered if Baycrest’s dishonesty had not deprived Callow of the opportunity to bid on other contracts, then Callow would have made an amount that was at least equal to the profit it lost under the winter maintenance agreement.

In the concurring opinion, three judges concluded that the majority’s reliance on the civilian doctrine of abuse of a right distorts the analysis in Bhasin v. Hrynew and ignores the distinction between honest performance and good faith in the exercise of contractual discretion.

The only dissenting judge concluded that Baycrest’s conduct may not be laudable, but it does not fall within the category of “active dishonesty” prohibited by the duty of honest performance. The dissenting judge found Baycrest had no obligation to speak when it became aware of Callow’s mistaken belief that the contract would not be terminated unless Baycrest had taken positive action that materially contributed to that belief. The justice further found that absent a duty to disclose, it is far from obvious when exactly one’s silence will knowingly mislead the other contracting party or at what point a permissible silence turns into a non‑permissible silence that may constitute a breach of contract.

COMMENTARY

There are a few key takeaways from this case:

First, your intention may be irrelevant. You may get sued for creating misapprehension or giving false statements, even if you do not intend the counterparty to rely on it. The counterparty may draw conclusions from your conduct as well. For example, when discussing terms of a potential renewal, they may reasonably infer that the contract is likely to be renewed. When you realize that the counterparty has a mistaken belief about the performance of the contract, and only if your conduct has caused that mistaken belief, you should immediately correct them.

Second, a key difference lies between “relevance to the contract” and “relevance to the performance of the contract”. If you fail to disclose matters relevant to the contract itself but irrelevant to the performance of the contract, this does not breach the duty of honest performance, unless there is a separate duty to disclose.

Third, whether or not a party has “knowingly misled” its counterparty is a highly fact-specific determination, and can include lies, half-truths, omissions and even silence. This merely exemplifies that dishonesty or misleading conduct is not confined to direct lies. Therefore, if you doubt whether the exercise of a contractual right or performance of contractual duty constitutes a breach of duty of honest performance, you are strongly advised to seek legal advice to reduce the risk of future litigation.

If you are dealing with Intellectual Property contracts or Intellectual Property contract disputes, please feel free to reach out to MBM for a free initial consultation.

For more information, please contact:

T: 613-567-0762
E: general@mbm.com

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

No success for Questor in its quest for an injunction

Posted on by Debbie Malek

QUESTOR TECHNOLOGY INC V STAGG, 2020 ABQB 3

Despite whatever the clauses in employment agreements may read, an injunction will likely not be granted if it does not seem fair and equitable to do so.

In this decision, while the Court of Queen’s Bench of Alberta (the “ABQB”) declined to issue an injunction in favour of Questor Technology Inc (“Questor”), it did order former employees of Questor (the “Defendants”) to return to Questor any and all confidential information they had taken from Questor in breach of their employment contracts.

BACKGROUND

Questor, an environmental technology company, is in the business of selling custom incinerators, used primarily in the oil and gas industry for burning waste gasses like methane. The Defendants had designed a low-pressure waste gas combustion solution for Questor, while employed by Questor. However, after departing from Questor, the Defendants launched a company of their own, offering a competing low-pressure waste gas incinerator (the “Competing Technology”).

Questor asserts it is the owner of the Competing Technology by way of either: (i) terms of the employment contracts signed by the Defendants, or (ii) application of the common law. As such, Questor sought an injunction against the Defendants from aspects such as competing in the market against Questor, or infringing Questor’s intellectual property (“IP”) – Questor claimed it owned the IP relating to the Competing Technology.

The sole issue in this decision was determining whether an interim injunction ought to be granted in favour of Questor against the Defendants.

ANALYSIS

The ABQB ran through the test in RJR-MacDonald Inc v Canada (AG), [1994] 1 SCR 311 to determine whether an injunction ought to be granted. The test would require Questor to demonstrate: (a) that there is a serious issue to be tried; (b) that Questor will suffer irreparable harm if the application is refused; and (c) that the balance of convenience weighs in favour of granting the injunction. However, the ABQB found that this case was an exception, where a higher standard would apply for the first element of the test, namely that Questor would need to establish a strong prima facie case.

A detailed analysis of the Defendants actions led the ABQB to determine that Questor had not established a strong prima facie case for the injunction. Similarly, the ABQB was unconvinced that Questor had clearly proven that it would suffer irreparable harm if the injunction were not granted. Finally, the balance of convenience seemed to favour the Defendants, as an injunction would shut down everything they had built, while Questor, a larger, publicly-traded company, would likely be unaffected if the injunction was denied.

The ABQB remarked that as injunctions are an equitable remedy, it would not be fair and just to issue one in those circumstances.

COMMENTARY

Different areas of the law are often much more interconnected than people may believe. Obligations to confidential information, employment agreements and assignments of inventions all affect IP rights. While the ABQB did not answer questions like whether Questor was the rightful owner of the Competing Technology, the questions themselves still played a key role in determining the outcome of the case. Even if relevant IP questions had been answered, it would still likely have been unjust to grant an injunction in this case.

If you are dealing with a legal issue where IP may be involved, please feel free to reach out to MBM for a free consultation.

T: 613-567-0762
E: general@mbm.com

Authors: Osman Ismaili, Patent Associate

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

Planning ahead: how to protect your business when you’ve licensed-in critical IP and the licensor is going under?

Posted on by Debbie Malek

Starting November 1, 2019, important changes are coming into force to the Canadian Bankruptcy and Insolvency Act (BIA) and the Canadian Companies’ Creditors Arrangement Act (CCAA) that are directly related to intellectual property. These changes will better protect licensees of intellectual property when the licensor becomes insolvent by allowing a licensee in good standing to continue to use the licensed IP, despite licensor’s financial troubles.

In particular, the changes clarify that a licensee that “continues to perform its obligations under the agreement in relation to the use of the intellectual property” can continue to use the IP, including enforcement of the use exclusivity, during the term of the agreement, even if:

  • the IP is sold in a BIA restructuring
  • the IP is disclaimed or sold in a BIA liquidation
  • the IP is disclaimed or sold in a receivership
  • the IP is sold in a CCAA restructuring

As a licensee wishing to continue to take advantage of the licensed IP, it is critical that you continue to meet all obligations in the licensing agreement.

In order to properly plan ahead, it is our recommendation that a licensing agreement always include contingency arrangements in the event of the licensor’s insolvency. Always have the licensing agreement reviewed by an IP lawyer. These contingency arrangements should specify:

  • provisions detailing what licensee’s obligations are in the event that a licensor cannot meet their on-going obligations in the event of insolvency.  For example, if a licensor receives payments for on-going support activities, the licensee should specify in the agreement that these payments will be payable only if licensor is able to complete these on-going support activities.
  • provisions detailing who will maintain the IP in good standing in the event that the licensor can no longer continue to financially support the IP.

Having appropriate contingency in place in the event of licensor insolvency will help better protect licensee’s business.

For more information please contact:
Claire Palmer, Senior Patent Agent
T: 613-801-0450
E: cpalmer@mbm.com

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

Intellectual Property Licensing: A Win-Win Agreement

Posted on by Debbie Malek

There are several benefits associated with protecting your valuable intellectual property (‘IP’) through registration. Owners often view registration of their patents, trademarks, copyright and other IP as a way to prevent third parties from using their proprietary idea, brand name or computer code. This is a valid consideration; however it is not the only benefit to an IP owner.

Licensing IP can be a very valuable additional income source to a business, and can be the conduit by which lucrative partnerships are created.

The World Intellectual Property Organization (‘WIPO’) categorises a licensing agreement as “a partnership between an intellectual property rights owner (licensor) and another party who is authorized to use such rights (licensee) in exchange for an agreed payment (fee or royalty).”[1] In this way, a licensor is able to obtain monetary gain from his or her IP by providing permission to a licensee to use that IP. The specifics of this permission can be particular to suit the needs of the parties.

Some factors to consider include:

Exclusivity – a license to use IP may be exclusive to one licensee. Exclusivity is often viewed favourably by a licensee as it provides surety that other competitors will not be able to use the IP for their own business purposes. Alternatively, the license agreement may stipulate that the license to use the IP is non-exclusive. This may be favourable to the licensor as it provides them with an opportunity to enter into several different licensing relationships using the same IP, potentially deriving multiple income sources for use of the same technology.

Jurisdiction/Territory – a licensing agreement can be jurisdictionally specific, in other words, you may select the specific territory, region, area or country in which the license will be valid. Some companies elect to negotiate a worldwide license allowing the licensee more freedom to use the IP in the jurisdiction of their choice. Others limit the IP use to a specific country in order to prevent the licensee from entering into their own market.

Transferability/Sublicensing – it is possible for a licensor to provide a licensee with the ability to sublicense the IP themselves. The licensor may require that such sublicensing be approved, and structured such that sublicense fees will be paid to the IP owner. The licensor may also elect to provide a non-transferable license, which allows the IP owner to keep complete control of which parties are able to legitimately use the IP.

Term – the term of the licensing agreement can be a defined length, renewable, based upon other conditions (such as licensing fees, production targets, licensor election, etc.), or perpetual. A conditional term can act to motivate a licensee to achieve certain business targets that ultimately provide financial benefit to both the licensee and licensor.

Fees – license fees come in many forms including upfront payments, recurring annual or monthly fees, royalty based, or a combination of these options. It is possible to create a license fee payment structure that mitigates risk and rewards strong performance, or penalizes poor performance. A fee structure (like term structure) can act to motivate a licensee towards success in their own business.

Field of Use –the rights granted to use the IP may be limited to a specifically defined field. In this way the licensee is only able to use the IP for a particular commercial purpose and the licensor will maintain the right to directly exploit or license the same IP in a different field of use.[2]

Type of Licensed IP – the type of IP licensed will also impact how the license agreement is developed. The permitted use and control of a patented technology can be significantly different to the permitted use and control of a trademark, and the obligations on each of the parties to the agreement need to reflect the particular licensed IP.

Ownership of Licensed IP Developments – once a licensee is able to use a licensor’s IP, it is important to consider how developments and improvements to the licensed IP will be controlled, particularly when it comes to ownership. It is possible to impose conditions upon the license that require all developments of the licensed IP to be owned jointly by both parties to ensure the spoils of newly created IP is realized equally.

The benefits of IP licensing are several and apply to all parties involved. A licensor may be able to form partnerships to expand the reach of their own business, or may secure an additional income stream. A licensee may expand their business by utilizing technology they were not previously able to use. There are many other options to further address the factors discussed above, and the specifics can be manipulated to better suit each particular licensing relationship.

When developing an IP License Agreement, consider consulting a trained IP specialist with experience negotiating and formulating these agreements. With his or her help, it is likely both you as an IP owner and the licensee of your IP will find yourselves part of a win-win agreement.

 

For more information, please contact:

T: 613-567-0762
E: trademarks@mbm.com

Author: David Lotimer, Associate

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.

 

[1] ‘Licensing of Intellectual Property Rights; a Vital Component of the Business Strategy of Your SME’, World Intellectual Property Organization, http://www.wipo.int/sme/en/ip_business/licensing/licensing.htm.

[2]‘Fact Sheet – Commercialising Intellectual Property: License Agreements’, European IPR Helpdesk, www.iprhelpdesk.eu, November 2015.

 

Contractors and the Legal Ownership of your Intellectual Property

Posted on by Debbie Malek

Many entrepreneurs and small business owners exhibit an extraordinarily high level of motivation. They are individuals with the wide-ranging skill set that is necessary to achieve success in their chosen field. One of the most important characteristics of these leaders is the ability to recognize their own deficiencies and to identify a capable person to fill that void within their team. If they’re lucky these individuals will sign on to be a part of the team full time as an employee, however many teams are filled with freelance developers, contractors, consultants and the like. Utilizing these less permanent team members can be cost effective and can help to bolster the capabilities of your company. However it can also create legal issues relating to intellectual property ownership.

It important to protect the legal rights associated with intellectual property developed by you and your team, and to ensure that you are not breaching the legal rights of others. It is also important to ensure that your company legally owns the valuable assets you and your team have created. Clear ownership rights comfortably allow you to use, license and sell the inventions, products, and software developed by your team.

Generally when an employee contributes to work done for the employer in the context of their employment, all work product of that employee will automatically be owned by the employer. However ownership rights are slightly murkier when a non-employee is involved in the creation of work product.

What happens for instance when a contractor creates a website for your company based on a template she produced prior to her engagement? What if a software developer uses source code originally created during his engagement with another company in the creation of a new platform for your business? How will ownership rights in a logo created by a graphic designer be distributed? The relationship between employers and non-employees can bring about these types of work product ownership questions.

But don’t fret – there are many ways to structure a relationship with a non-employee in order to protect your business and to guarantee your ability to use the work product created for your company.

Clear intellectual property ownership clauses within a contractor agreement can provide you with confidence in legal ownership of work product. Disclosure and liability obligations related to third party material used within contractor developed work product can be essential to protect your company from legal attacks. Intellectual property licensing can help define invention contributions and allow your company to legally incorporate previously developed intellectual property into your own creations. These are but a few of the strategies you can utilize to clarify ownership rights with non-employees.

The next time you look to fill out your team with a specialized contractor, consider obtaining the advice of an intellectual property expert. We can help you structure the relationship so that you can confidently work with a non-employee, and allow you to get back to focussing on driving the success of your business.

For more information, please contact:

T: 613-567-0762
E: general@mbm.com

Author: David Lotimer, Associate

 

This article is general information only and is not to be taken as legal or professional advice. This article does not create a solicitor-client relationship between you and MBM Intellectual Property Law LLP. If you would like more information about intellectual property, please feel free to reach out to MBM for a free consultation.
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